Shopping Center Trends in Placemaking & Merchandising
Finding balance between the objectives of landlords and community stakeholders is vital in shaping the future of a shopping center. Key factors such as merchandising and placemaking define the property’s ambiance and drive foot traffic, creating a dynamic and profitable environment for landlords, tenants, and the community. The integrations of experimental shopping, technology, and innovative store formats have become cornerstones, ushering in a new era of traffic generation for landlords. Those willing to embrace these new trends reap the benefits of something the sector has not seen before.
What is Retail Placemaking?
Examples of placemaking include hosting events like live concerts, partnering with local farmers’ markets, displaying interactive art, and organizing weekly community gatherings. All of these have one thing in common: community.
In today’s digital environment, consumers have hundreds of options to choose from when it comes to their shopping needs. Placemaking is the landlord’s ability to breathe life into otherwise mundane areas, converting centers into focal points that draw in more foot traffic.
An inviting, stimulating, and pleasant atmosphere helps consumers prioritize social interaction and shared experiences when shopping in person. This characteristic of consumer behavior underscores the importance of aligning shopping centers with the surrounding community’s needs, ensuring a seamless blend of community engagement and commerce.
Placemaking has redefined a center’s core role. Instead of solely concentrating on the physicality and shopping options, placemaking empowers developers to become visionaries, crafting environments where individuals can live, work, and thrive. With this new focus on community comes a new responsibility for landlords, who should be prepared to collaborate with local government authorities on placemaking initiatives. This collaboration is inevitable, particularly when planning events, as it can require obtaining the necessary permits, utilizing police resources and diverting normal traffic patterns.
The four key qualities that contribute to placemaking success, according to Project For Public Success.
- Accessibility
- Activities
- Comfortability
- Sociability
The Impact of Placemaking
The application of placemaking principles has resulted in numerous social advantages, including fostering connections among individuals, promoting social unity, decreasing crime rates, and fostering trust among different stakeholder groups. These principles ultimately serve as a catalyst for economic growth.
Case Study: Placemaking
The Grove Los Angeles, CA – Features entertainment amenities like a cinema, sit-down restaurants, and major retailers in a visually appealing outdoor environment that promotes community engagement.
Crocker Park Westlake, OH – Upscale, open-air mall offering trendy brand name shops, a range of restaurants, and an IMAX theater
King of Prussia Philadelphia, PA – Chic lifestyle development and open-air mall with shops, restaurants, and landscaped seating areas.
The Battery District Atlanta, GA – The Battery Atlanta brings restaurants, stores and entertainment to Truist Park.
Retail Merchandising
Retail merchandising is the strategy that the tenants undertake to draw people into their store. The traditional retail business model has become outdated. For retailers to maintain their competitive edge, they must embrace online and offline transformations, ultimately reshaping how consumers interact on a merchandising level. The current retail landscape is evolving into a dynamic, innovative, intuitive, and highly engaging environment. Retailers that have integrated these initiatives into their merchandising strategies are reaping substantial benefits.
Having an effective retail merchandising strategy has the ability to convert more browsers or window shoppers into purchasing customers, as well as create a more positive in-store experience for consumers.
The U.S. Department of Commerce provides quarterly data on overall retail sales within the country, distinguishing between traditional retail and e-commerce. In the latest update for Q4 2023, e-commerce sales reached $285.2 billion, marking a 0.8% increase compared to the previous quarter.
Crafting the Ideal Tenant Lineup
Thriving shopping center landlords understand that the success of their property hinges largely on the tenants themselves. Selecting the right tenants is a strategic decision that involves a thorough analysis of the tenant’s format, target demographic, annual average revenue, and more. The shopping center’s location, size, and overall theme are also other factors.
The ideal tenant lineup will differ depending on the shopping center and is not a one-size-fits-all approach. By aligning the tenant mix with the specific characteristics of the center and its customer base, landlords can optimize customer engagement and drive increased sales.
Including an anchor tenant in a retail project greatly enhances its credibility and has the potential to attract substantial foot traffic. Grocery stores and category killers such as Walmart and Target continue to be the most sought after anchor tenants in the open air space.
These tenants will often own their own dirt, or work collaboratively with landlords to share in the risk of the shopping center development.
Leveraging Technology for Enhanced Center Performance
As the digital age transforms retail, it’s become more prevalent that landlords must use technology to gain insights into tenant performance and enhance overall center success. One such technology is mobile location data, which offers a wealth of information regarding customer behavior and trade areas–the geographic distance retail consumers travel. By analyzing this data, landlords can gain insights into customer behavior patterns, helping them make informed decisions about tenant selection and center optimization.
Geofencing is a popular tool that landlords can use to establish digital boundaries around specific areas. Landlords can see which tenants are drawing in the highest number of consumers, how often these people visit, and what their shopping patterns look like.
So, how does this work? When a smartphone is activated, it emits signals containing its MAC address (media access control) while searching for Wi-Fi or Bluetooth connections. These signals can be captured by store sensors, providing information such as the frequency of shopper visits, duration of their stay, preferred sections like shoes, children’s clothing, or sporting goods, and whether they engage with window displays or simply pass by.
A study conducted by airship and sapio research (2023) revealed that 80% of global consumers visit a retailers’ website on their smartphones, and 74% use a retailer’s app while shopping in-store.
Social Media’s Growing Power
Michael’s, North America’s largest provider of arts and crafts, sales have experienced a significant jump since mid-April 2023, a month into Taylor Swift’s “The Eras Tour.” Chief Merchandising Officer John Gehre said, “Overall, sales in our jewelry category, including jewelry-making kits, are up more than 40% chainwide since the friendship bracelet-making trend really began to take off.” Michael’s stores in Pennsylvania, where two concerts were held, and Swift’s hometown experienced a sales surge of over 500%.
TJ Maxx, the parent company of Marshalls and Homegoods, experienced a sales boost attributed to a viral TikTok trend among Gen Z consumers. The trend gained traction after a TikToker shared a video praising the brands for their budget-friendly outfits and guiding followers to discover great finds in the stores. This surge in interest contributed to a 6% sales growth during the quarter ending July 29, 2023.
Other major retailers, including Nordstrom, Victoria’s Secret, and Lowe’s, are also embracing the power of social media within their physical stores to engage mobile-savvy shoppers, leading to increased sales. Retailers are strategically integrating social media elements into their window displays and marketing efforts. For example, Nordstrom utilized a giant 3D installation on its roof to promote its summer sale, creating a captivating Instagram-worthy experience. Lowe’s innovatively transformed its Fix In Six Vine tutorials into animated window displays at one of its Manhattan locations. Similarly, Victoria’s Secret encourages shoppers to take selfies in front of displays for a free gift, tapping into the interactive nature of social media to enhance the in-store experience and drive customer engagement.
Looking Ahead
Shopping centers continue to hold their own in the realm of heightened online shopping habits. Landlords that embrace placemaking, take the time when choosing their tenant mix, utilize emerging technologies, and continue to place emphasis on community building have a much higher likelihood of success in a competitive and always changing market.
